Zillow Inc. announced plans Monday to acquire Trulia Inc. in a $3.5 billion stock deal that will combine two behemoths in the online home purchase and rental search business.

The companies said they will continue to operate as separate sites and brands after the deal closes next year, but together, they will develop new mobile and Web products for consumer use and court more real estate agents to advertise on the sites.

The deal comes as the housing market is on the mend, haltingly, and traffic to real estate websites is on the increase. No one dominates that space more than Zillow and Trulia, whose combined, unduplicated audience was 68.4 million unique U.S. visitors in June, representing 71 percent of total visitors to real estate sites, according to comScore.

Though it's become quite the pastime for consumers to troll a site like top-player Zillow to check home values, view properties and be a nosy neighbor about the home for sale next door, not everyone is a fan. Some of the listings come directly from realty brokerages and others are aggregated from other data sources, and there have been complaints — particularly from the realty community — calling the data inaccurate or outdated.

Zillow CEO Spencer Rascoff told financial analysts that the combined company will seek to negotiate more licensing deals to get property listings directly from local multiple listing services.

While discussions between Midwest Real Estate Data LLC, the MLS for the Chicago area, and Zillow have taken place, no licensing agreement was ever reached so local MLS listings are not fed directly to Zillow's site. MRED only sends listings to Trulia if a local real estate brokerage asks them to, according to Jeff Lasky, a spokesman for MRED.

Meanwhile, individual agents can pay to have their listings on the site, with their contact information included. Several large Chicago-area brokerages feed their listings directly to one site or the other or both, figuring it's a cost of doing business and getting leads. But even they complain about the accuracy of the information.

“That is the elephant in the room,” said Michael Pierson, president of Berkshire Hathaway HomeServices KoenigRubloff Realty Group. “Ultimately if the information isn't the most accurate and the cleanest, the consumer is not going to have a great experience. Aggregators have not been the friend of a lot of brokers.”

In acquiring Trulia, Rascoff hopes to capture more of an incredibly fragmented real estate advertising marketplace. Real estate agents spend an estimated $12 billion annually on marketing to consumers each year and combined, revenues of the two companies account for only 4 percent of that, Rascoff said. The rest of it goes to newspaper advertising and search engine marketing, among other things.

Both Zillow and Trulia had money-losing first quarters as they increased their marketing spending.

“We can innovate faster,” Rascoff told analysts. “Mobile is rapidly becoming the media of choice for online home shopping.”

“Real estate agents who use technology are better agents and better agents are better advisers,” he added. “That philosophy is not going to change. We both believe technologically enabled agents are the future.”

The planned acquisition, which has been approved by both companies' boards of directors but must pass muster with shareholders and regulators, is the latest move this year by Zillow to boost its game.

In March, Zillow poached two executives of Move Inc., which operates realtor.com for the National Association of Realtors. Move and the trade group subsequently filed a lawsuit against Zillow and one of the executives, alleging breach of contract and misappropriation of trade secrets, among other charges. A judge in Washington state earlier this month issued a preliminary injunction against Zillow in the case.

“It's a big deal for our industry,” said Thaddeus Wong, co-founder of brokerage @properties, of the announced acquisition.”They're spending so much money becoming the real estate expert in the consumers' mind.”

Wong, though, is among the real estate brokers concerned about the future of realtor.com and multiple listing services if Zillow's data was 100 percent correct. In recent months, expensive marketing campaigns from both the trade association and Move Inc. sought to highlight the accuracy of realtor.com's data.

Stephen Baird, president and CEO of brokerage Baird & Warner, shares Wong's concerns. “There will be one good multiple listing service, whether it's the one the industry has here or whether it's Zillow or Trulia or someone else,” he said. “If I was the National Association of Realtors or realtor.com, I would be really worried.”

Seattle-based Zillow focuses on home listings for buyers as well as a wealth of free information for homeowners to keep tabs on their own home values and those of their neighborhood. It also operates a mortgage marketplace, HotPads and Postlets.

San Francisco-based Trulia concentrates more on property listings but the cross-selling opportunities should boost its position in mortgages and rentals, said Trulia CEO Pete Flint, who will remain in that position after the deal closes, reporting to Rascoff.

“We're both very excited about the rentals opportunity,” Rascoff added. “Each of us independently has very large rental audiences and we're both in the early stages of monetizing those rental audiences.”

According to comScore Inc., Zillow's network counted 53.8 million unique visitors in June, up 27 percent from a year ago. Trulia's visitor count was 31.6 million, up 20 percent from June 2013.

Under the transaction, which is expected to close in 2015, shareholders of Trulia will receive 0.444 of Zillow's Class A common stock for each share of Trulia owned. At closing, Trulia shareholders will own 33 percent of the combined company with Zillow shareholders owning the remaining two-thirds.

By combining functions, the combined company expects to see cost savings of $100 million in 2016.

Shares of Zillow closed at $160.32 a share Monday, up less than 1 percent. Trulia's shares closed at $65.04, up 15.42 percent.

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